The Nation

Rise in spending tied to contracts

A House panel says the trend to privatize led to waste, fraud in 187 deals valued at $1.1 trillion.

WASHINGTON — When George W. Bush reclaimed the White House for the Republicans in 2000, he asserted that his party would use tightfisted management techniques to get federal spending under control. Instead, spending has spiraled to records annually, growing by nearly half in the six years since he took office.

And the Democrats, who regained control of Congress in January, reported Wednesday that contracts with businesses to provide government services -- everything from cafeteria management to weapons systems -- were heavily responsible. Contracts let by the government with limited or no competition are growing fastest of all, the Democrats said.

Contracting out services to the private sector has always been controversial with the unions representing federal employees, whose jobs are on the line every time the government looks outside its own bureaucracy for workers.

Advocates of the practice reply that the profit motive gives the private sector -- but not the public workforce -- an incentive to provide services more efficiently, and therefore more cheaply.

That's not what was found by the staff of the House Oversight and Government Reform Committee. In a report to Rep. Henry A. Waxman (D-Los Angeles), the panel's chairman, the staff said government auditors had found "significant waste, fraud, abuse or mismanagement" last year in 187 contracts valued at $1.1 trillion. The auditors were from Congress or the departments that had awarded the contracts.

The 187 contracts represented a 60% increase over the 118 that had been identified in the previous year as rife with waste, fraud, abuse and mismanagement.

The Office of Management and Budget, which oversees the executive branch's procurement process, looked at the data differently. Without accepting the 187 contracts as an accurate number, it said that they were a scant one-third of 1% of all new contracts awarded in 2006. The increase from the year before, it said, probably reflected improved fraud detection rather than increased fraud.

The House committee staff focused on contracts given to sole bidders or without full competition -- for example, with certain potential bidders excluded.

Contracts awarded to sole bidders totaled $103 billion in 2006, the staff found. That's an increase from $97.8 billion the year before, and more than double the $46.6 billion in contracts awarded to sole bidders in 2000.

As for contracts awarded with less than full competition -- including those with only a single bidder -- their value rose to almost $207 billion in 2006 from just over $145 billion in 2005 (an increase of 43% in a single year) and $67.5 billion in 2000 (more than tripling since Bush took office in January 2001).

The Office of Management and Budget, using a somewhat different collection of contracts, found that the percentage open to competition has held steady, at about 64%, since 1999. In the 1990s, that share had been as low as 57%.

The committee staff report found that the top five recipients of federal contracts in 2006 were defense contractors. Lockheed Martin topped the list, with 14,016 contracts worth $31.5 billion.

In sixth place was Halliburton, which Vice President Dick Cheney headed until the summer of 2000, when he became Bush's running mate. Halliburton, also a major defense contractor, had ranked 28th in 2000.